Nonprofits with multiple chapters in the Lower Hudson Valley that have lost their tax-exempt status

international associations of lions

American legion and american legion auxiliary

pta new york congress

rotary international (includes related foundations)

knights of columbus

little league baseball

veterans of foreign wars

pop warner little scholars

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The Town of Carmel Historical Society was founded in 1977, but it couldn’t hold a celebration or fundraiser to commemorate its 35th anniversary this year.

Like more than 1,500 Lower Hudson Valley nonprofits — 19 percent of the total number in the region — the society’s tax-exempt status was automatically revoked because for three years in a row, it didn’t file annual reports with the IRS.

“It’s kind of killed a year of our activities,” said Lillian Eberhardt, president of the group.

Following the federal Pension Protection Act of 2006, all tax-exempt nonprofits, not just larger organizations, were required to provide paperwork electronically to the Internal Revenue Service each year. Previously, groups with annual receipts of $25,000 or less didn’t have to file each year, but the IRS had no way of knowing whether they still existed.

An investigation by The Journal News/LoHud.com found that just 24 of the nonprofits that lost their tax-exempt standing in the past three years have regained it. Many on the list of 1,528 are small, volunteer-run groups that continue to operate in some form, though they are not permitted to accept tax-deductible contributions and could be required to file a federal income-tax return and pay applicable income taxes.

A number of revoked organizations in Putnam, Rockland and Westchester counties — from athletic leagues and veterans organizations to community service clubs — don’t appear to operate anymore or have been absorbed by parent organizations.

Nationally, the IRS has revoked the tax-exempt status of about 450,000 organizations and has received only 22,000 applications for reinstatement, or 5 percent, said Peggy Riley, an agency spokeswoman.

All nonprofits were supposed to file by May 17, 2010. The IRS extended the deadline to Oct. 15, 2010, to avoid automatic revocation, the Urban Institute Center on Nonprofits and Philanthropy said in an August 2011 report.

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“And then in order to do no harm, they (the IRS) tried to be very, very careful before they revoked,” said Thomas Pollak, senior research associate and program director for the group.

The center said in the report that more than 275,000 had lost their exempt status. It concluded that most of the organizations that are out of compliance are defunct.

Some members of small organizations in the Lower Hudson Valley have complained that they submitted the required documents months ago and still have not received IRS approval.

IRS spokesman Chris Kerns said the agency had no comment on the complaints.

Health Lifeline in Nyack, a clinic that provides free medical care to disadvantaged residents with chronic ailments, has lost its tax-exempt status. Dr. Lloyd Hamilton said he wasn’t aware originally that the clinic needed to file with the IRS since it runs on less than $50,000 a year. The clinic, which opened in 2009, serves about 400 patients and is deeply dependent on donations to fund the care it gives to people who have nowhere else to go.

“Doctors are not good accountants,” he said, adding that two accountants have offered to help the clinic pro bono.

Hamilton said he hopes the IRS will work swiftly to restore tax-exempt status to Health Lifeline, which is run on donations. The status was revoked in May 2011.

“We have enough funds in backlog just to get us through,” he said.

Other groups operating without the tax-exempt status include Fox Lane High School Teachers Association in Bedford, Friends of Kent Library, the garden clubs of Irvington-on-Hudson and Larchmont, and the Andrew McArdle Sports Scholarship Fund in Carmel. The Rockland County Police Emerald Society Pipes and Drums is on the list, but a move to separate from Rockland County Police Emerald Society was abandoned and the band never operated separately, said Tom Gaynor, who formed the pipe and drum corps.

The charitable organizations that lost their exempt status still can raise money, but it isn’t tax deductible, said Mark Tulis, a White Plains attorney and former Westchester County legislator. Others, such as college alumni associations, labor organizations, domestic fraternal societies and country clubs, are tax exempt but cannot accept tax-deductible contributions because of their IRS tax category.

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Obstacles, confusion

For small groups, complying with federal law is a challenge under the best of circumstances. For volunteer-run nonprofits it’s even more difficult, Tulis said.

“To do it right, you’ve got to have an accountant,” he said.

The few nonprofits in the region to have their tax-exempt status pulled, then reinstated, include Rotary International clubs in Carmel and Spring Valley; Youth Community Outreach Program, or Y-COP, of Mount Vernon; Helicopter Emergency Lift Program of Spring Valley; the Goldens Bridge Fire Department; and Kelley Cemetery in Carmel, according to IRS data.

Goldens Bridge Fire Department was in the process of changing from a 501(c)(4) organization, which is for civic leagues and social welfare groups, to a 501(c)(3) charity when it received its revocation letter from the IRS, said Edward Canora, treasurer. It took him more than two years and hundreds of hours to figure out what needed to be done, fill out all the paperwork and get approval, he said.

The department received the 501(c)(3) designation about a year ago. All donations to these charities that are in good standing are tax deductible. With a 501(c)(4), contributions to volunteer fire companies are tax deductible, but they generally aren’t for other groups in this category.

“Rather than having the confusion there, it was just easier to go for the 501(c)(3),” Canora said. Groups like United Way will give only to 501(c)(3)s, so it made sense to make the change, he said.

Nonprofits that no longer operate are supposed to file notices of termination with the IRS, but many apparently have not. A Spring Valley group that was called Dead People Talk Inc. appears to be defunct. A young man who answered the door at the address listed for the “Hometown Heartbeat Barry Manilow Fan Club” in Yonkers said a previous tenant must have been a club member. One of the directors of “A Little Harmony Barry Manilow Fan Club” in the Bronx said in an email that the Yonkers chapter is no longer active.

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One reason behind the 2006 federal law was to clean up the IRS master file. Before the new requirements, the IRS had no way to know whether nonprofits had shut down, Riley said.

The law required small nonprofits to file e-postcards with basic information and certification that gross receipts were less than $25,000. The amount was raised to $50,000 for tax years on or after Jan. 1, 2010.

Getting reinstated

Nonprofits had years to bring their paperwork up to date before having their tax-exempt status pulled. Some organizations are aware they lost their tax-exempt status and are trying to get it reinstated, while others still didn’t know they were out of compliance. Illnesses, deaths and other issues led to lapses in record-keeping for some groups.

If these small organizations submit properly filled-out tax documents by Dec. 31, they will be considered to have established reasonable cause for not filing tax records and will be reinstated. The reinstatement may be retroactive to the date of revocation if the group can show it had reasonable cause not to file for three consecutive years. The IRS application for reinstatement states the agency understands many small organizations are volunteer-run and “may face unique challenges in meeting federal tax obligations.”

Leaders of Fox Lane Teachers Association, which gives out annual scholarships, did not respond to requests for comment. Andrew McArdle Sports Scholarship Fund, named for a 16-year-old Carmel High School student who died in a 2002 car crash, lost its status in May 2010, IRS records show. The organization held a fundraising walk/run in September. The McArdle family could not be reached for comment. Both nonprofits are 501(c)(3)s.

The Friends of the Mamaroneck Library was dormant while the library was being renovated and expanded from 2009 until summer 2011, said Caverly “Lee” Stringer, group president. During that time, the former treasurer moved out of town.

Stringer said no one told him about the filing requirements, so Friends lost its tax-exempt status. He is working with an accountant to be reinstated.

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“When I heard about it was in July. We have until December to file,” he said.

Friends of Kent Library is in the same situation. Annmarie Baisley, treasurer, said she’s aware of the revocation and will take care of it by the end of the year. She took over the job from another member of the group.

“We’re all volunteers, but I will get it straightened out,” said the former Kent town supervisor who is also an accountant.

Mount Vernon Public Library has submitted a form requesting reinstatement to the IRS but is still working on the five years of 990 forms that have to be filed for the application to be complete, said Na’im R. Tyson, president of the board of trustees. The library expects to submit them by Friday, he said.

Public libraries are tax-exempt organizations and do not need 501(c)(3) status in order to accept donations, said Terry Kirchner, executive director of the Westchester Library System, which works with the county’s 38 libraries. As 501(c)(3)s, they have additional options for receiving gifts, he said.

Nedra Gillette, president of Garden Club of Larchmont, said when contacted by The Journal News that there had been discussion of whether the club needed to file paperwork with the IRS. Its tax-exempt status was automatically revoked in November 2010, IRS records show.

“Older members of our club were convinced that we had this clearance … forever,” Gillette said.

Garden Club of Irvington-on-Hudson, a 501(c)(3) like Garden Club of Larchmont, also has lost its tax-exempt status. Member Mary Toomy said the club and its accountant never received notification of the changes from the IRS and subsequently lost its tax-exempt status. The group is filing the paperwork to be reinstated, she said.

“Needless to say, everyone is upset about this,” she said in a phone message.

'Naughty list'

The IRS made it easy for small organizations to file by creating an e-postcard, said Neil Johanning, treasurer of New York State Congress of Parents and Teachers Inc. There are about 1,500 local PTAs in New York, and the statewide group has been trying to help the roughly 200 on the “naughty list,” he said.

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“Some did it right away and jumped on it and were all set. I would say 90 percent,” he said.

Other PTAs filed incorrectly, didn’t file or may have been dormant, Johanning said. Locally, that includes chapters in Elmsford, Grand View, Hartsdale, Mount Vernon (four), Nanuet, New City (two), Nyack, Spring Valley (three), Valley Cottage, West Harrison and Yonkers (eight).

Nine United Way chapters in Westchester and Putnam are on the IRS’ automatic revocation list. However, local affiliates merged under the United Way of Westchester and Putnam about five years ago, spokeswoman Shannon Cobb said.

They hadn’t operated as separate organizations for many years, she said.

The Kiwanis New York District website lists the Mount Vernon and Yonkers clubs as active chapters. There is no listing for Yorktown Heights. The East Yonkers chapter is up-to-date in its filings.

“We told them (member clubs) over the past three years that the IRS and the secretary of state were checking for clubs that had not filed recently, and we suggested they file, but there’s no way we can force them to file,” said Dave Booker, New York district secretary for the Kiwanis.

The Town of Carmel Historical Society has been trying to get up to date on paperwork with the IRS since last year, said Eberhardt, who heads the group. The old Town Hall building, where the society has exhibits, is open between April and November.

“They could be a little bit more considerate of getting our status back to us. It’s kind of ridiculous, actually,” she said.